September 10, 2007

Patronage Saints

Nearly everybody was baffled when, half a dozen years ago, the Congressional Black Caucus (CBC) mounted the strongest resistance to campaign finance reform within the Democratic Party. One CBC member, Al Wynn of Maryland, even co-sponsored (along with then-Ohio Republican and current federal inmate Bob Ney) the counter-measure designed to kill reform. Numerous other Black Caucus members sided with Wynn. "You have the potential for opposites to come together," said Representative Bennie Thompson of Mississippi. "I'm talking about liberal African Americans and conservative white Republicans." Thompson has proven prophetic. Somehow, the Congressional Black Caucus has become the party's most reactionary wing.

In 2001, an ad hoc group of millionaire black businessmen began campaigning for repeal of the estate tax, claiming that the tax fell heavily upon black families. "Elimination of the Estate Tax will help close the wealth gap in this nation between African American families and White families," they argued in a newspaper advertisement. (In fact, this was the opposite of the truth: African Americans made up about 12 percent of the U.S. population but less than half of 1 percent of estate tax payers.) Several of the CBC's members latched onto this position anyway.

This year, some of the same black millionaires are campaigning to preserve the private equity tax break. The issue here is a loophole in the tax code that allows private equity managers to take most of their salaries in the form of capital gains, which is taxed at less than half the rate of regular income. The rationale here is essentially the same as the estate tax--you can find some African Americans who benefit, even though the vast majority of beneficiaries are obviously white and all are extremely rich. Amazingly, some CBC members seem to be persuaded.

Also this year, numerous CBC members have declared their support for "Medicare Advantage." In traditional Medicare, the government covers the cost of retirees' medical expenses. In Medicare Advantage, it pays insurers to do it. Because of the extra level of private bureaucracy and profits, it costs the government 12 percent more to insure a patient through Medicare Advantage than through traditional Medicare. Democrats want to reduce Medicare Advantage to the same cost as traditional Medicare and use the savings ($149 billion over the next decade) for expanded health care for uninsured children. Naturally, private insurers have unleashed a swarm of lobbyists to protect their subsidies.

The argument they came up with, and have sold with some success, is that the private program disproportionately caters to minorities. This boondoggle rationale was no more persuasive than the others. First of all, it isn't true: As a report by the Center on Budget and Policy Priorities discovered, minorities are actually a bit less likely to use Medicare Advantage than the general population. Second of all, even if it were true, why would it make sense for the government to spend more money to enroll minorities in a program that works no better than regular Medicare?

These otherwise bewildering episodes come into clearer focus as part of a burgeoning alliance between the CBC and K Street, including business lobbies that are anathema to liberals. Indeed, businesses with the worst reputations among Democrats have had the most to gain from building ties with the Caucus. In recent years, Wal-Mart has "discovered a newfound interest in the Congressional Black Caucus," The Hill reported. As chair Carolyn Cheeks Kilpatrick described the CBC's ties to K Street, "Our outreach effort is vast."

So vast, in fact, that the CBC's outreach to K Street has metastasized into a general opposition to any reforms that limit the influence of money in politics. In addition to opposing campaign finance reform, last spring, many CBC members strongly resisted Democratic legislation to curtail the influence of lobbyists--with Roll Call reporting that the strongest Democratic opposition to the bill came from the CBC and the Blue Dog Coalition, whose members hail mostly from conservative districts. And many in the CBC likewise resisted Speaker Nancy Pelosi's efforts to remove Representative William Jefferson from office after FBI agents discovered $90,000 in alleged bribes inside his freezer.

Perhaps the most telling episode occurred earlier this year, when many CBC members tried to stop Pelosi from limiting committee chairmen to six-year terms. The self-interest angle was clear enough: CBC members tend to come from safe seats and can easily amass longevity. But their opposition to Pelosi again put them in opposition to the long tradition of liberal reform in Congress, which has sought to limit the power of committee chairmen, who are often in hock to narrow interest groups. The CBC is reverting to an older, grubbier tradition of maintaining power through patronage.

In fairness, none of these episodes involve the entire caucus, and many involve just a few members. But the CBC's increasing pro-business tendencies are important for two reasons. First, in a closely divided Congress, even a handful of defections can be crucial. And, second, defections from African American members are more useful than those from conservative Democrats to businesses seeking to moderate their image. As Artur Davis of Alabama--who has admirably resisted many of K Street's entreaties--puts it, "There's a strategic desire by the corporate community to put a different face forward on these issues." It's a deviously effective strategy--liberals are more hesitant to challenge black Democrats because complaints about CBC members cozying up to the business lobby have invariably been met with insinuations of racism.

Why would lawmakers from some of the poorest and most staunchly Democratic districts embrace the interests of organized wealth? The poverty of their districts makes them far more dependent on K Street than many other Democrats--unlike the Pelosis of the world, they can't rely on rich liberal donors in their home districts. And, as safe as their seats may be, primary challenges are not unheard of. Moreover, their fund-raising allows them to share largesse with fellow members and thus amass influence.

"They want to be seen as players," says one senior Democratic aide. "They don't want to be pigeonholed in niche issues like inner-city poverty." This is all well and good for aspiring congressional power brokers, but sort of unfortunate for poor people who live in inner cities.